How Consumers Value Digital Privacy: New Survey Evidence

Regardless of how they define it, few people would deny that they’d like more privacy. The rise of the data-driven economy has thrust privacy issues to the fore of the public consciousness and it is unsurprising that the average American citizen, when surveyed, expresses a desire for less privacy-invasive behavior by both private firms and by government. But are they willing to bear the costs associated with additional privacy protection? The case for government intervention in digital markets is made stronger if consumers value privacy highly and if they are highly uninformed.

Based on a random sample of Internet users, Professor Fuller finds:

71% of Google users would prefer the same experience without tracking. For these users, privacy is an economic good of which they would prefer more, ceteris paribus.

Only 15% of Google users would be willing to pay anything to avoid tracking, suggesting that at least for this group the ceteris paribus assumption is key.

Of this group, the average annual willingness to pay to avoid tracking was $77, substantially lower than the $850 the average American spends on soft drinks each year.

Among all Google users, 90% respond that they are aware of Google’s information collection, suggesting that, at least with respect to Google, ignorance regarding the practice of information collection is not widespread.

These findings lead Professor Fuller to conclude that “the ‘privacy paradox’ may not be a result of biases causing consumers to act inconsistently with their true preferences. Rather, it’s possible that the paradox may be explained on simpler grounds: surveys often take an unconstrained approach; behavior online always incurs a real cost (even if it’s a very small opportunity cost).”

Professor Fuller will be presenting his paper, Is the Market for Digital Privacy a Failure?, which draws on this new evidence, at the FTC’s PrivacyCon on February 28.